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The New Gambling Law Open for Comments

  • November 6, 2024

July 3 marked an interesting day, as the government released its first draft of a new Gambling Law along with all relevant materials. This draft is quite extensive, totaling 417 pages, and took considerable time to review thoroughly. After the release, the draft went through a round of public commentary, and some feedback has already leaked to the public. With the comment period now closed, work on the draft continues. This text won’t cover the current situation but instead looks forward to what the future might hold based on the draft, comparing it to similar licensing models.

A new version of the gambling draft was released on November 1, 2024. To make it clear what has been updated, we’ve included dates under each section heading.

New Gambling Law

New Draft 11/1/2024

Update 11/5/2024

The latest draft, released on November 1, 2024, has now been reviewed. One detail worth noting is the tight timeline, with multiple sections still marked with comments like “due to the timeline set in the government program, we haven’t had time to evaluate…” This suggests the current version is still incomplete in many respects.

It has now been suggested that the law could take effect as early as January 1, 2026. However, it’s important to note that the Licensing and Supervisory Authority would not yet be operational at that time, so the task would initially fall under the jurisdiction of the police. 

There’s a sense that this rush could lead to issues that will only intensify as the implementation date approaches. In Finland, such rushed schedules often indicate future complications. We’re still holding to the initial 2027 date but will await Parliament’s spring review for any updates.

 

What Will the New Gambling Law Bring?

This commentary reflects on the initial draft, and at this stage, it seems unlikely that it will be approved in its current form. The draft offers a preliminary outline of what the final version might look like, though it will require further refinement and clarity. Nonetheless, a starting point is necessary.

The proposal includes some unwelcome news: as of early 2026, Finnish players will not yet have access to new Finnish-licensed casinos. This was a persistent concern, as passing a law through Parliament is not a quick process. Additionally, this reform will impact many other laws.

Changes will extend beyond the Gambling Law, affecting the Lottery Law, Lottery Tax Law, Income Tax Law, and the Criminal Code, among others. Given the broad scope of these amendments, it’s clear that the timeline is too tight, and an extra year is needed for adjustments and reviews.

When Will the Gambling Law Take Effect?

The draft suggests that the Gambling Law and all associated regulations could mostly take effect in early 2027, enabling the gambling sector to begin operations with licenses in place. So, there’s still a considerable way to go.

Once the necessary laws and regulations are enacted, an organization will need to be created for handling license applications, alongside an impartial body for oversight. There’s a notable issue with the government potentially supporting a national gambling company while simultaneously overseeing other organizations. This presents a clear conflict, which has already been highlighted.

The Gambling Law is interesting because it will define how attractive a Finnish gambling license will be, its approach to marketing, and what the cost will be. Hopefully, the extra year will allow for rational decisions that balance the needs of all parties.

Origins of the New Gambling Law

For context, let’s recall where the new Gambling Law originated. The Orpo government included in its program the need to reform the gambling system, setting the process in motion.

The government program included the following development goals that the new Gambling Law would address:

  • Prevent and reduce health, social, and financial harms
  • Improve the gambling system’s channeling effectiveness
  • Strengthen sector oversight and prevent money laundering and result manipulation
  • Levy taxes on companies outside the monopoly system, as they currently benefit from Finnish players but pay no license fees or taxes and don’t assume responsibility for gambling problems
  • Direct consumption to authorized offerings
  • Ensure that marketing is not directed at minors and is presented in moderation

Licenses

The draft outlines three types of licenses:

  • Exclusive license
  • Gambling license
  • Gaming software license

 

The exclusive license is intended for lotteries and betting games, physical casino games, and horse racing games.

The gambling license is designated for sports betting, online casino games, and online bingo, targeting operators in competitive gambling markets.

The gaming software license applies to companies offering software for gambling operations.

Applying for a License

Under the new Gambling Law, license applicants based outside the EU will need a representative domiciled in Finland to apply for a gambling or gaming software license. EU applicants will not need a representative in Finland, an interesting point as, for example, Malta requires companies to also be located in Malta.

The Licensing Process

Update 11/5/2024

The licensing process details are still uncertain. It’s not yet clear if a single license will cover all licensed games or if each category will require its own license.

License Validity

icenses will be valid as follows:

  • Exclusive license: 10 years
  • Gambling and gaming software licenses: 5 years

 

Activities can commence immediately upon license approval.

License fees have not yet been disclosed, so it’s not possible to compare them to licenses from Malta, Estonia, or Curacao.

Rules for Operating Gambling Games

The requirements for how operators may proceed are well-known and include the following:

  • Players must be registered
  • Identity and place of residence must be verified
  • Age restrictions for players must be observed
  • Game bans and restrictions on resuming play must be in place

 

Additionally, the processing of personal data must comply with Finnish laws.

Marketing Under the New Gambling Law

Before any draft was published, marketing was already a topic of much debate. It was suggested that operators would be uninterested in a license without marketing rights. After all, a license is a three-way arrangement between the operator, the licensor, and the player. It must be a compromise and cannot cater solely to one party.

Marketing is expected to be allowed in some form, though predicting specifics at this stage is difficult. Time will tell how this will take shape in later drafts.

Marketing Restrictions After License Activation

Update 11/5/2024

Regulations for marketing were expected. The current draft stipulates that marketing must be executed by the license holder or a party with a contractual relationship with them. 

Marketing should be moderate in frequency, quality, and visibility. Marketing must not interact with consumers, so they cannot comment on ads on social media.

 

Prohibited Marketing Tactics

Update 11/5/2024

Marketing cannot:

  • Be aggressive
  • Involve harassment, coercion, or pressure
  • Make claims or create impressions that deviate from facts

 

Essentially, advertising cannot encourage gambling as a way to improve one’s financial situation or as a substitute for work, nor should it emphasize big wins.

It will be interesting to see how bonuses, typically used as incentives for attracting new players, will be regulated.

 

Affiliate Marketing

Update 11/5/2024

Affiliate marketing will be entirely banned to prevent players from being directed to gambling sites. This decision aims to eliminate unauthorized operators, as it becomes unclear whether the marketing originates from a licensed operator or an illegal one.

This is somewhat unfortunate, as affiliate sites have shared a lot of valuable information and insights about gambling in general. They haven’t only served for marketing purposes, though that has naturally been an important part of their role.

 

Information Used in Marketing

Update 11/5/2024

The information that must always be displayed in marketing contexts includes:

  • The legal age requirement for gambling.
  • Measures to manage gambling-related harms.
  • The license holder’s identity.
  • The identification of the granted license and the issuing authority’s logo.

 

The latter two items must always be displayed in visible marketing, with exceptions only for radio advertising, internal use by the license holder, and material intended for partner organizations.

 

Ban on Direct Marketing

Update 11/5/2024

Personalized marketing of games will be prohibited if an individual has not expressly consented to or authorized marketing. This requirement must be presented clearly and cannot be hidden within the terms. Direct marketing must not be automated. 

Therefore, phone-based marketing will be entirely prohibited, even though players often have their phone numbers registered with the gaming venue.

 

New Gambling Law and Supervisory Authority

Naturally, the new gambling law will require oversight. This trend is emerging in Curaçao and has already been implemented in Malta and Estonia. In Finland, the new authority will be called the Licensing and Supervision Authority, which will operate based on legal stipulations.

This supervisory role has sparked criticism, as I previously noted. How can the state have its own gaming company while also supervising other organizations? This conflict presents a critical issue and potentially a stumbling block for credible operations.

New Gambling Law and Consequences

With regulation comes consequences, which the new gambling law addresses. Penalties include:

  • Banning the operation and marketing of gambling games.
  • License revocation.
  • Threat fines.
  • Penalty fees.
  • Compliance fines.

 

The distinction between penalty fees and compliance fines is that penalty fees apply to minor violations, while compliance fines are imposed for more serious neglect or breaches.

As a result, criminal law will also change somewhat under the new gambling law.

New Gambling Law and Taxation

Licensing will also amend the Lottery Tax Law and Income Tax Law. Operators obtaining Finnish licenses will pay lottery taxes in Finland. The tax will be calculated on revenue, meaning player payouts are deducted from the stakes placed. The planned tax rate is 22%, aiming to maximize tax revenue.

This applies to both Veikkaus and PAF, so they will not receive any tax exemptions. 

Players’ winnings will still be tax-free. However, unlike the current model, only winnings from licensed Finnish operators will remain tax-free; those from unlicensed operators will not be tax-exempt.

Allocation of Gambling Revenue

It’s worth exploring where gambling revenue is channeled. The aim is to have Finnish players use licensed casinos. Each online casino with a Finnish license will be authorized. 

Revenue is intended to fund efforts to counteract gambling harms. However, the exact costs and the level of interest in Finnish licenses among foreign operators remain unclear.

If foreign operators show no interest in Finnish licenses, this will limit tax revenue available, particularly for combating gambling harms. Players prefer competition, so the market must be diverse and ample. At this stage, it’s difficult to assess the licenses’ appeal.

The Gambling License – What’s Next?

The process is still open, and initial comments will provide further guidance. The gambling license is coming, but there is much to be done. 

For instance, it’s challenging to predict how long the licensing process will take, as processing times vary significantly by authority. In some places, it takes a few months, while in others, just weeks. Finland may fall somewhere in between.

The Licensing and Supervision Authority will need its own information systems, which will take time to acquire. Licensing applications must start in 2026 so that operators can offer services from the beginning of 2027. 

The timeline is tight, and all changes must still be approved by Parliament.

Overseas Gambling

Update 11/5/2024

There are a few conflicting details, such as the stipulation that if gambling is only allowed in Finnish casinos after the reform, then winnings from gambling outside Finland will be taxable. However, this clause included the comment that “due to the target schedule, there hasn’t been time to assess whether gambling outside the system is possible or necessary to prohibit.” Thus, we do not know this precisely either. 

The aim of taxation is to redirect gambling back to Finland and to operators with Finnish licenses.

 

Preventing Money Laundering, Terrorism Financing, and Competition Manipulation

Update 11/5/2024

This section includes a comment that, “due to the target schedule,” and because of the EU’s ongoing comprehensive reform of anti-money laundering laws, implementation options have not been thoroughly assessed.

Age Limits

Update 11/5/2024

The age limit for gambling remains at 18, but 18-24-year-olds are now recognized as a high-risk group for gambling problems. However, no specific actions are proposed due to time constraints, meaning that marketing should not target this age group. 

Further guidance on this is awaited, as it’s an intriguing aspect.

Gambling Arrangements

Update 11/5/2024

This topic has also fallen behind schedule, so it remains unclear how the government’s goals for addressing gambling harms and improving channelization will be implemented.

 

Gambling Limits

Update 11/5/2024

There will be standard gambling restrictions, such as deposit limits, loss limits, and so on. Operators will be required to report on these and other factors. The list has a total of 13 items, and multiple state agencies will have rights to access this information.

The New Gambling Law is Still a Draft

The law is currently in draft form, and I’ve focused on the most interesting aspects here. Marketing will be an area of high interest for operators as it will, along with the license cost, determine whether a license is worth obtaining.

Another key question is pricing—how expensive or affordable will the license be? Patience is crucial here. Sweden, for example, has had to amend similar legislation multiple times. The law needs refinement since predicting all impacts in advance is difficult.

The costs need to cover operations, but this is still difficult to assess. It will be interesting to see how the licensing and supervisory structure is designed. Will it follow the traditional model with a “pile of managers,” or will a more modern structure be attempted?

What’s Next for Preparation?

The consultation period ended on August 18, 2024, after which the final adjustments will be made based on the feedback received.

In October, it’s time to notify the European Commission of the legislative proposals for reforming the gambling system. The Commission and other member states may provide feedback, with discussions on whether Finland’s reform poses a barrier to the free movement of services within the internal market. This phase lasts three months.

Once the Commission’s recommendations are received, the proposal will undergo further revisions. The government aims to submit the proposal to Parliament during the spring 2025 session, so preparation time is limited. A year from now, we will know more.

Summary of the New Gambling Law

After reading the proposal, I felt a bit overwhelmed and somewhat numb, as it included many comparisons to practices in other European countries. Unfortunately, countries differ significantly, so a clear model is unattainable.

The new gambling law itself is quite straightforward. It doesn’t introduce anything new but rather reiterates previously stated points. Once it reaches the Commission, there may be some new and interesting developments.

Naturally, the disappointment lies in waiting until early 2027 for a Finnish license and online casinos, but this can’t be helped. So, stay tuned, and I’ll update you whenever there’s progress.

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Tomi

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